Key Takeaways

GameStop ( GME ) shares gained ground to start the week ahead of the scheduled release of the video game retailer’s earnings report after Tuesday’s closing bell.

Analysts expect the company to post fourth-quarter earnings of 9 cents per share on revenue of $1.48 billion, though investors will likely be more focused on updates about the retailer’s investment strategy, specifically in relation to digital currencies.

Last month, GameStop Chairman and CEO Ryan Cohen acknowledged that he received a proposal from Strive Asset Management to convert the company’s nearly $5 billion cash reserve into bitcoin but has not yet said if the retailer will consider the idea.

Earlier in February, reports surfaced that the company was considering investing in alternative investments, including bitcoin and other cryptocurrencies, after Cohen posted a photo of himself with Michael Saylor , co-founder of Strategy ( MSTR ), formally known as MicroStrategy, the largest corporate holder of bitcoin.

GameStop shares, which also double as a meme stock favorite among retail traders, rose 3.5% to $25.61 on Monday, adding to last week's 7% gain, indicating speculative buying ahead of the company’s quarterly results. The stock is still down 18% since the start of the year.

Below, we take a closer look at GameStop’s chart and use technical analysis to identify key levels worth watching amid the potential for significant earnings-driven price swings.

Falling Wedge Breakout

GameStop shares broke out above the top trendline of a three-month falling wedge pattern on above-average volume in Friday’s trading session, possibly paving the way for an earnings-fueled rally. Moreover, the relative strength index (RSI) crossed back above the 50 threshold late last week, indicating improving price momentum.

However, in a conflicting technical signal, the 50-day moving average (MA) sits on the precipice of crossing below the 200-day MA to form an ominous death cross , a chart pattern that predicts lower prices.

Let’s point out three key overhead areas that could come into play if GameStop shares move higher and also identify several important support levels worth eyeing during potential retracements.